It may be cheaper to buy ETF's than mutual funds. (Mebane Faber)
"Funds of funds face a huge hurdle because of the high fees." (Mebane Faber)
Can active managers add value when everything is correlated? (ETF Replay)
Commodity indices behave like mostly energy. (MarketSci)
Asset classes are becoming more correlated. (MarketSci)

Some of hedge funds' returns come from liquidity risk. (CXO Advisory)
Be careful about shorting that VXX. (MarketSci)
The state of short-term mean reversion. (MarketSci)
What happens to P/E ratios when rates and inflation change? (Mebane Faber)

Average market performance on the last day of the quarter. (MarketSci)
Average market performance on the first day of the quarter. (MarketSci)
The stock market tends to be strong in the fourth quarter. (MarketSci)
Dividend payers: less volatility and a significantly higher return. (SurlyTrader)

I volunteer for Habitat for Humanity on the weekends. I may not enjoy painting my own house, but I like doing it for others.

What words would you use to describe a short-term mission trip? Perhaps not fun, but worthwhile? Difficult? Significant? Memorable? Exciting?

Adventure

The word adventure sums it up for me. We team up and face challenges, overcome them, and come out the other side having achieved a memorable goal. We rescue people. Maybe someone even gets the girl.

Why do we compartmentalize life? Painting is a chore, but Habitat for Humanity is fun. Preparing a lesson is boring, but a short-term mission trip is a thrill. Playing with the kids is tiresome, but soccer is real football.

It's tempting to grind through life waiting for the next great thing. Besides being tedious, the problem with this is that life today may be a preparation for that great thing, but you're not enjoying it.

Some of us may even find that life itself is that great thing, that it was right in front of us all along, and that we can change the world right where we are.

Whistle While You Wait

Time produces compound growth, both for money and for wisdom. If you save money and wait long enough, you'll eventually be able to fund a great adventure.

In the meantime, think about what makes adventures fun. What can you do to make painting the living room more like Habitat for Humanity? Maybe you can bring in a big group, serve them lunch, and let them debate philosophy while splashing paint on each other.

How can playing with your kids become more like a soccer game for you, not just for them?

Those of us who thirst for adventure get more than we bargain for. Such was the case for Tim Clissold, who moved to China in 1990 in the wake of Tiananmen Square, learned Mandarin, and raised more than $100 million of Wall Street's money with the intent to profitably transform Chinese businesses.

He discovered that the Chinese weren't numbers on a spreadsheet. They were real people, full of guile and greed. Successful business in China meant breaking contracts, speaking in half-truths, secretly moving money around, and staying one step ahead of a controlling but disorganized Communist government.

Chinese businessmen took Wall Street's money and then drove their factories into the ground, moving the capital to other bank accounts so they could start their new, competing factories. They had learned to live by their wits in a Communist world. Why treat these American foreigners any differently?

In the end, Clissold got taken, but so did all the American efforts to invest in China. The fund he helped manage lost money, but it was the only China fund to survive the 1990's intact. Meanwhile, local Chinese companies went public, China's stock market soared, and the standard of living rose rapidly in the coastal cities.

What Can We Learn From This?

As an investor, stick to what you understand. Clissold had a thesis that China was on the verge of a capitalist transformation. He was right, but he lost money. Buying private businesses in a foreign country and trying to improve the management is a venture fraught with difficulties, since there are so many variables to control and even more that we can't see.

If you have an investment thesis but not extensive expertise, it can make more sense to express that thesis by trading liquid markets (stocks, funds, and futures) than to start a business. Managing a business also concentrates your risk. Unless you have a high net worth, it ends up concentrating all your risk in one place, and you can't get out easily if you decide it's not working out.

I used to romanticize the idea of going overseas, as I'm sure many others do. After years of working in China, Clissold's fund lost money, but he learned to appreciate the Chinese as a people rather than just an investment. If this is the main lesson you learn while overseas, will you be satisfied with your life? Yes is a good answer but not an easy one.

I'll leave you with an excerpt from the inside flap:

The idea of China has always exerted a pull on the adventurous type. There is a kind of entrepreneurial Westerner who just can't resist it: red flags, a billion bicycles, and the largest untapped market on earth. What more could they want? After the first few visits, they start to feel more in tune and experience the first stirrings of a fatal ambition: the secret hope of becoming the Mr. China of their time.

In the 1990s, China went through a miraculous transformation from a closed backwater to the workshop of the world. Many smart young men saw this transformation coming and mistook it for their destiny. Not a few rushed East to gain strategic footholds, plant their flags, and prosper. After all, the Chinese had numbers on their side: a seemingly endless population, a thirst for resources, and the tide of history. What they needed was Western knowledge and lots of capital. Or so it seemed...

Mr. China tells the rollicking story of one man's encounter with the Chinese. Armed with hundreds of millions of dollars and a strong sense that he and his partners were -- like missionaries of capitalism -- descending into the industrial past to bring the Chinese into the modern world, Clissold got the education of a lifetime.

The ordinary Chinese workers, business owners, local bureaucrats, and party cadres Clissold encountered were some of the most committed, resourceful, and creative operators he would ever meet. They were happy to take the foreigner's money but resisted just about anything else. At every turn, the locals seemed one step ahead of Clissold's crew threatening to take the Westerners for all they were worth.

In the end, Mr. China isn't a tale of business or an expatriate's love for his adopted land. It's one man's coming-of-age story where he learns to respect and admire the nation he sought to conquer.